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Student loan debt. Youve probably heard this term at least once. It affects everyone, whether it be now or later on in life. During the 20th century, around the end of World War II, the federal government recognized the wasted brain power due to the lack of higher education for the majority of society except a few wealthy white people. Later the government began supporting higher education through a series of laws, such as the 1862 Morrill Act, which allowed colleges to acquire space for their campuses in exchange for agricultural programs, and the GI Bill in 1944 to provide veterans access to education, loans, unemployment compensation, and job counseling (Best, 15). However, over some time, the loans provided to students became bigger because they were unable to find employment during the recession or they misused the money for other purposes, such as going to vocational studies instead of higher education. Current student debt has been estimated to be over 1.4 trillion dollars, becoming a complex issue in our nations economy (Tatham, 2019). Students are unable to raise a family, own a house, or even buy a car because of the loans they owe from higher education. There have been protests and movements for students loans to be forgiven, even as high unemployment keeps young students from pursuing higher education. There have been warnings about the issue of student loans bringing another recession in the economy. There have been efforts by state and federal governments to tackle the issue through new policies, but the problem has become worse due to a lack of understanding of the issue or focusing on the wrong aspect of the issue.
Student debt forgiveness is a bad idea because it would not change what got students into debt in the first place, it wouldnt prevent future students from taking on more debt, and it wouldnt reduce the pressures causing tuition costs to rise. College graduates are one of the more privileged groups in America because they have higher wages and a lower unemployment rate. They have already benefited from government subsidies in the form of grants, tax credits, subsidized tuition, and loans. Forgiving college graduates would be giving money to a part of society thats already well off. Unlike other types of loans, you cannot declare bankruptcy. The government will find a way to collect that money, whether it be collecting your tax refund or taking a certain percentage of your paycheck. If borrowers could declare bankruptcy on their loans, then lenders cannot use the government as a collection agency. This would lead to fewer loans given out and higher interest rates. so borrowers would need to have a plan for paying them back. Colleges would be pressured to control their tuition costs.
Its not just students who go into debt, but also their parents. According to CNBC, the average parent plus balance is $25,600 (Epperson and Dickler 2019). Keep in mind, this is just for undergraduate education. It turns out more people are borrowing money to attend for-profit, private colleges, and graduate school. In fact, about 40 percent of loans are taken out for graduate programs. One of the biggest causes of student debt is actually graduate school, which does not have the same borrowing limits as undergrad does.
Democratic candidates Elizabeth Warren and Bernie Sanders proposed nearly eliminating all student loan debt. Now there are a few problems with these proposals. For one thing, they only target those who went to a public college and borrowed less. The second problem is that the plan would create a generation of student loan lottery winners, with losers on each side (Carey, 2019). People who spent years working hard to pay off those loans would be upset and start wondering why this program was not available when they went to college. It is important to understand that these proposals will not make college cheaper, it just makes it cheaper for the student, and also fails to address the issue of why higher education costs so much. High borrowing of anything, whether it be for a car, a house, or education means that the thing that was purchased which caused the high debt was expensive, to begin with. The accreditors of colleges should have stricter standards for the value that the college is providing. Accreditors look at default rates and examine the success of graduates. We need a system that provides greater value for the money.
Suppose everyone’s student loans were forgiven. What about all those people who actually paid all that money to go to school? Nobodys going to get any of that money back. Small business owners rarely can get loans compared to those who went to college. Many small business owners put their own savings to start up their company, and sometimes it doesnt work out in their favor, just like college. It would be unfair to have everyone pay higher taxes just because they chose to go to college and get a degree that pays less than the cost of student loans. You also have to keep in mind that there are people who didnt go to college and worked their way up through a construction or office job. If you dont learn from your mistakes, you will often repeat them. Personally, I think there should be some sort of test people need to pass and get a certificate before taking out a loan this big so people know exactly what they are getting into. I do believe that we do need to get away from the traditional cycle, but I dont think forgiving everyones student loans is the right way to do so.
Another problem with student loans is that they arent going straight to college. Students receive these checks in the mail and after paying for tuition, books, room, and board, they can do whatever they want with the rest of it.
A common argument in support of student loan forgiveness is that there will be an economic boost and the wealth gap will be shortened. But there are other ways to do that, like having a universal basic income, like Andrew Yang is proposing, which will help the poor people move up more in society than the top people because proportionally its a lot more of your income. We should be making college a little bit cheaper, maybe implementing regulations like not requiring to have the latest version of a textbook or reducing the cost of living on campus. There are many ways to make a good amount of money in society without having to go straight to a 4-year university. You could make even more if you go to a cheaper trade school or get a real estate license. Community college is a great option because you dont have to worry about spending a lot on classes, food, or where to live, plus there are fewer time restrictions when it comes to classes, and that can allow you to take on a part-time job and save up some money.
The media often talks about how the amount of student loan debt prevents millennials from buying a big house, a nice car, having kids, basically the American Dream. While I do believe college is more expensive than it should be, I think the reason tuition costs are increasing every year is because of how much the government is involved with the process. Forgiving all student debt would bring positive benefits, but they would only last for a year or two. If the next generation of college students gets to graduate without any debt, then there would be arguments about unfairness from people who graduated from college who have either paid or currently paying off their loans. If all of a sudden, anybody can go get a degree for free, that leaves a large cost to the government. It would be great for everyone to get an education, but most degrees outside of the STEM field wouldnt be as important as they used to be. If all colleges were to be funded by the government you would not really be able to have the freedom of speech because your viewpoints would have to be tailored towards the government.
Works Cited
- Best, Joel, and Eric Best. The Student Loan Mess: How Good Intentions Created a Trillion-Dollar Problem. University of California Press, 2015.
- Carey, Kevin. Canceling Student Loan Debt Doesn’t Make Problems Disappear. The New York Times, The New York Times, 25 June 2019, nytimes.com/2019/06/25/upshot/student-loan-debt-forgiveness.html
- Casse, Daniel, and Bruno V. Manno. The Cost and Price of College and the Value of Higher Education. Academic Questions, vol. 11, no. 4, Fall 1998, pp. 3854. Academic Search Complete, doi:10.1007/s12129-998-1058-z. Accessed 5 Feb. 2020.
- Epperson, Sharon, and Jessica Dickler. The Latest Victims of the Student Debt Crisis Parents. CNBC, CNBC, 14 May 2019, cnbc.com/2019/05/10/the-latest-victims-of-the-student-debt-crisis-parents.html
- Tatham, Matt. Student Loan Debt Climbs to $1.4 Trillion in 2019. Experian, 6 Sept. 2019, experian.com/blogs/ask-experian/state-of-student-loan-debt/
- Vedder, Richard Kent. Going Broke by Degree: Why College Costs Too Much. AEI Press, 2004.
- Wenisch, Michael. The Student Loan Crisis and the Future of Higher Education. Catholic Social Science Review, vol. 17, 2012, pp. 345350. Academic Search Complete, doi:10.5840/cssr20121731. Accessed 7 Feb. 2020.
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